Russian president Dmitry Medvedev has proposed Vladimir Putin as presidential candidate for 2012, almost certainly guaranteeing Putin's return to office.

Medvedev made the proposal today in an address to a congress of United Russia, the pro-Kremlin party that dominates Russian politics. There was no immediate official reaction from Putin or the party, but the proposal brought a heavy round of applause from the congress delegates.

The proposal appears to end months of intense speculation over whether Medvedev would seek a second term or step aside for his powerful predecessor.

Putin, who currently serves as prime minister, took the rostrum immediately after Medvedev. "It is a great honour for me," he said to loud cheers and applause from thousands of party members gathered in a Moscow sports stadium. "Thank you, I hope for your support." He then launched into a lengthy lecture on changes and policies he saw necessary for Russia.

These included a surprising suggestion that Russia's wealthy should pay higher taxes than average citizens.

The flat income tax that came into effect during Putin's 2000-2008 presidency has been widely praised as improving tax collection. But Putin's proposal for higher taxes for the wealthy appears to reflect growing discontent over the wide gaps between the grandiosely rich and the millions of Russians who continue living in poverty or marginal circumstances.

The congress must formally nominate its candidate, which appeared to be a foregone conclusion judging by the heavy applause.

Putin became prime minister in 2008 after two terms as president, stepping aside because of constitutional term limits, but as Russia's most powerful and popular politician he had been widely expected seek a return to the Kremlin.

Medvedev had been widely seen as simply a caretaker figure. As president, he has struck a reformist posture, calling for improvements in Russia's notoriously unreliable court system and for efforts against the country's endemic corruption. But his initiatives have produced little tangible result.

Medvedev agreed at the congress that he would head United Russia's list of candidates in the parliamentary election and Putin then invited him to take over the government.

Medvedev today said he would continue his reform efforts and implied he would aim to stay in government after the presidential elections, for which a date has not been set.

Under constitutional changes, the presidential term in 2012 will be six years instead of four, putting Putin, if he wins, in a position of nearly unchallengeable power.

Putin, who built his popularity on the back of strong economic growth, told the party congress yesterday that salaries and pensions would continue to grow, and he promised increased funding for education, health care and housing.

But he also cautioned that the government may need to take unpopular steps to cope with the global financial turmoil.

"The task of the government is not only to pour honey into a cup, but sometimes to give bitter medicine," Putin said. "But this should always be done openly and honestly, and then the overwhelming majority of people will understand their government."